Kuala Lumpur:The asset quality of banks in Malaysia remained sound in February with the overall net impaired loans ratio remaining stable at 1.0 per cent, Bank Negara Malaysia (BNM) said in its Monthly Highlights-February 2020 report released Tuesday.

The central bank said local banks have also continued to maintain sufficient buffers against potential credit losses with total provisions, including regulatory reserves, at 125.1 per cent of total impaired loans.

It said that net financing growth was higher at 5.0 per cent in February from 4.7 per cent in January, due to the faster expansion in outstanding loans of 3.9 per cent.

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“Outstanding corporate bond growth also increased slightly to 8.2 per cent (January: 8.0 per cent). Outstanding business loan growth increased to 3.6 per cent from 2.5 per cent in January due mainly to lower repayments, which reflects a normalisation from its high levels in recent months.

“Disbursements were broadly sustained during the month. However, outstanding household loan growth declined to 3.7 per cent from 4.5 per cent in January on account of lower disbursements for credit cards, and securities and car loans,” it said.

As a result, it said, the ringgit depreciated by 3.3 per cent, in line with all regional currencies of between -3.4 to -0.3 per cent, while the FBM KLCI declined by 3.2 per cent to close at 1,483 points as at end- February, in line with regional equity markets.

Headline inflation moderated to 1.3 per cent in February as compared to 1.6 per cent in the previous month, mainly reflecting the decline in transport inflation following lower prices of retail fuel products and the reduction in toll rates on selected highways by 18 per cent.